TRA - Turners Automotive Group [previously TNR - Turners Limited]

[trader_jackson]

didn't even blink when a 5c dividend was paid either...
Then again, was always too cheap at under $3

[Timesurfer]

didn't even blink when a 5c dividend was paid either...

Maybe just a little.

[percy]

Thank you Todd Hunter and Aaron Saunders for a fantastic presentation.
Most impressed with the straight honest answers given to the great number of questions asked.
None fobbed off.Todd and Aaron really so knowledgeable in all parts of their business.
They certainly know where they want to take the business, and know how to do that.Exciting times.
I thought I knew the business fairly well,but learnt so much today.

[LAC]

Anything to share from the Q and A's from today?

[BlackPeter]

Thank you Todd Hunter and Aaron Saunders for a fantastic presentation.
Most impressed with the straight honest answers given to the great number of questions asked.
None fobbed off.Todd and Aaron really so knowledgeable in all parts of their business.
They certainly know where they want to take the business, and know how to do that.Exciting times.
I thought I knew the business fairly well,but learnt so much today.

I second that ... probably (in terms of information provided and discussions) the best roadshow event of any company I attended so far. Great to hear they plan to do this from now on annually.

[percy]

Anything to share from the Q and A's from today?

Leases of sites.TRA have the capital to develop their own sites.So landlords need to focus their attention.!
New bond issue will not be convertible, and at a lot lower interest rate.
Securitization works out a lot lower interest charge to TRA ,and requires a lot less capital ratio than bank lending.
Looking at strong organic growth,and will only buy another dealer to secure a site.

[blackcap]

Thank you Todd Hunter and Aaron Saunders for a fantastic presentation.
Most impressed with the straight honest answers given to the great number of questions asked.
None fobbed off.Todd and Aaron really so knowledgeable in all parts of their business.
They certainly know where they want to take the business, and know how to do that.Exciting times.
I thought I knew the business fairly well,but learnt so much today.

That is the impression I got from the presentation in Porirua yesterday afternoon. Todd was apologetic too about the way the rights issue was completed with respect to retail investors and "has learnt" from that experience.

[Beagle]

Thank you Todd Hunter and Aaron Saunders for a fantastic presentation.
Most impressed with the straight honest answers given to the great number of questions asked.
None fobbed off.Todd and Aaron really so knowledgeable in all parts of their business.
They certainly know where they want to take the business, and know how to do that.Exciting times.
I thought I knew the business fairly well,but learnt so much today.

I second that ... probably (in terms of information provided and discussions) the best roadshow event of any company I attended so far. Great to hear they plan to do this from now on annually.

Good that you astute gentlemen were impressed by the roadshow as was I with their presentation in Auckland.

[percy]

Todd Hunter has a good sense of humour.
Some one asked about Dorcester legacy loans.
"All written off the books."
pause
"However still active,"
"So some names come up again,"
pause
"When applying for a loan when buying a car from Turners"
pause
"Yes your car loan looks as though it will be approved...….once you have made satisfactory arrangements to clear your outstanding Dorcester loan." ...lol.

Apologise for taking a bit of a liberty with what Todd actually said.

[Snoopy]

Leases of sites.TRA have the capital to develop their own sites.So landlords need to focus their attention.!

It is interesting to see how things like this go in cycles. 'Back in the day' 'Turners Auctions' (as it was then) sold off their premises to reduce debt. Today 'Turners Automotive Group' not so worried about debt. Aaron Saunders told us they are only paying 4.5-5.5% on bank interest: not so far above home interest rates! One shareholder thought even that was too much and urged them to borrow from Japan at 1%! But I digress.

The problem with renting a premises is that landlords want to build a large building and so get maximum rent. Turners favour a small building (hence lower rent) with plenty of land to stock their cars outside. So both the current Christchurch premises and Penrose in Auckland are 'sub optimal' according to that paradigm. However, both premises have a couple of years to run on their lease agreements. I have to take back what I said before about Turners not being into property development. Buying your own site is the best way to get the site you want. Stick your custom built 'container office' on your new site, which doubles as a billboard if you go for the two story version and design in a back-lit high wall.

Then once the site is developed to Turners requirements, lock in a long lease and sign a lucrative rental agreement. In doing so, you will maximize the capital value of the property for sale and so maximize the development margin returned to Turners. Or if the property is on a potentially lucrative site in a main centre, Turners are not averse to retaining their sites in house. There are a few years of property development in the pipeline!

Finally when the site has run its course, bring in the crane and take your office building away to the next site! The ultimate in leasing capital efficiency?

New bond issue will not be convertible, and at a lot lower interest rate.

They seemed keen on the message of no more - significant - earnings dilution.

Securitization works out a lot lower interest charge to TRA ,and requires a lot less capital ratio than bank lending.

The explanation of the process of securitization was enlightening. The banks are quite fussy about the loans they like grouped together - they want cars loans plain and simple, and the more homogeneous the amounts and terms, the better. Turners fund heavy equipment, and even light property development (the expansion of a dental practice was mentioned). But banks won't have those in their securitized loans! Never mind, Oxford will do those in house.

Car loans supported by bank loans require Turners to hold on the books, shareholders funds based on 20% of the value of the car loans, with the balance of the borrowed money charged out to Turners at a rate of 4.5 - 5.5%. Contrast that to the securitized loans.

Turners are only required to hold on the books 8% of the value of the securitized car loans (so they are more 'capital efficient'). Once a loan is securitized the BNZ (who does the securitization) gets direct access to the loan cashflows. As 'payment' for this privilege, the charge on securitized bank loan funding to Turners is reduced to 3.5 - 4.5%.

SNOOPY